The French antitrust regulator is preparing to charge U.S.-based computer chip maker Nvidia for allegedly engaging in anti-competitive practices, Reuters news report said.
This development follows a series of raids in the graphics cards sector conducted last September, which were part of a broader investigation into cloud computing. Nvidia, the leading global manufacturer of chips used for both artificial intelligence and computer graphics, was one of the primary targets of these raids.
In a regulatory filing last year, Nvidia disclosed that regulators in the European Union, China, and France had requested information regarding its graphic cards. However, the European Commission is currently unlikely to expand its preliminary review, as the French authority is focusing on activities of Nvidia.
It will be a major set back for Nvidia since the US-based company has a commanding share in the AI chip market. The size of the artificial intelligence (AI) semiconductors market globally is expected to total $71 billion in 2024, a rise of 33 percent from 2023, according to a report from Gartner.
The French watchdog recently issued a report highlighting competition concerns in the generative AI sector, specifically pointing to the potential for abuse by chip providers. The report emphasized the sector’s heavy reliance on Nvidia’s CUDA chip programming software, the only system fully compatible with the GPUs essential for accelerated computing.
Additionally, the regulator expressed unease about Nvidia’s recent investments in AI-focused cloud service providers, such as CoreWeave.
CoreWeave announced plans to invest an additional $2.2 billion in Europe to address the growing demand for AI infrastructure, bringing its total investment in the region to $3.5 billion. CoreWeave is building several data centers in Europe.
With access to Nvidia chips, which are in short supply, CoreWeave gains a competitive edge over major cloud service providers like Amazon Web Services, Microsoft Azure, and Google Cloud.
In Q4 2023, the top three cloud providers – AWS, Microsoft Azure and Google Cloud – jointly grew by 21 percent and accounted for 66 percent of total Cloud spending, said Yi Zhang, Analyst at Canalys.
AWS, Microsoft Azure and Google Cloud do not want to relay on costly AI chips from Nvidia. They are looking for alternatives including their own customized AI chips to run profitable business.
Analysts, in a TrendForce report, said easing of GPU shortage allowed data center business to account for 87 percent of NVIDIA’s revenue for FY1Q25; Sources of demand for AI servers expand beyond CSPs to include sovereign Cloud and other applications.
Companies found in violation of French antitrust rules face fines of up to 10 percent of their global annual turnover, although they can offer concessions to avoid penalties. Meanwhile, in the United States, the Department of Justice is leading an investigation into Nvidia as it shares oversight of Big Tech with the Federal Trade Commission.
Baburajan Kizhakedath
